- Nigerian Breweries gets nod to raise N600b
Netherlands-based Heineken N.V has indicated a firm commitment to invest at least N342 billion in additional equity funding in its Nigerian subsidiary and Nigeria’s largest brewer, Nigerian Breweries (NB) Plc. The new investment could reach about N400 billion based on standby commitment and prior interest by the multinational.
The commitment at the weekend came as President Bola Tinubu rounded off an official visit to Netherlands, seeking to boost Nigeria-Netherlands partnerships.
Heineken’s representative and Interim Chairman of Nigerian Breweries (NB) Plc, Mr Sijbe Hiemstra, said the multinational is ready to provide an initial commitment of up to N342 billion in new equity injection into the Nigerian subsidiary.
Shareholders of NB at the weekend approved a major financial restructuring that would see injection of some N600 billion in new equity funds to the company.
At the Annual General Meeting (AGM) at the Muson Centre, Onikan, Lagos, shareholders mandated the board to float a N600 billion rights issue as a means of capital restructuring aimed at boosting the company’s balance sheet.
Shareholders authorised the company to apply any outstanding shareholder loan, trade payable, or any other loan facility due to any person from the company as may be agreed by the person and the company, towards payment for any shares subscribed for by such person under the rights issue.
Also, the Board was mandated to offer shares not taken up by shareholders within the period stipulated under the rights issue to other shareholders of the company that have indicated interest in purchasing additional shares not taken up by the shareholders entitled to do so in the rights Issue, on such terms and conditions as may be determined by the directors, subject to complying with relevant regulatory requirements.
Heineken, which holds 57 per cent majority equity stake in NB, stated that it was ready to pick its allotted rights. Market pundits said the provision on additional allotment allows Heineken to buy additional shares, citing the multinational’s history of increase in equity stakes in NB through secondary acquisitions.
Hiemstra, former Regional President for Africa and Middle East for Heineken, said the majority shareholder, Heineken, has indicated its readiness to support the recapitalisation by taking up and paying for the portion of the shares allotted to it. Rights issue is traditionally pre-allotted on the basis of shareholdings.
Speaking at the AGM, Hiemstra explained that the decision to seek approval for the capital raising was is in line with the company’s commitment to improving its financial position and returning the business to profitability while creating value for the shareholders.
According to him, the objective of raising fresh capital to the tune of N600 billion is to enable the company settle its outstanding foreign exchange (forex) payables as well as part of the local bank facilities.
He said the balance sheet restructuring would lead to the elimination of the naira devaluation risk or foreign exchange losses as well as the reduction of huge interest burden on the company.
“Following the challenging year 2023, and the present volatility of the Nigerian business environment, we are focused on our strategic recovery plan backed by parent company Heineken, prioritising efficiency and agility in all areas of operations; and maintaining market leadership through its rich portfolio of brands. We will continue to demonstrate resilience to deliver value for shareholders and all stakeholders,” Hiemstra said.
Managing Director, Nigerian Breweries (NB) Plc, Mr. Hans Essaadi, said the company remains committed to delivering long-term growth to its shareholders, despite the current economic headwinds and challenges.
“While we cannot influence the external environment, we are committed to maintaining resilience in the face of adversity. We are confident that the company will remain in a good position to weather the storm. We will sustain a strong cost management culture; optimize our operational footprint; and leverage our strong brand portfolio, exciting innovations and route to consumer to win in the market,” Essaadi said.
A breakdown of the company’s audited results for the 2023 financial year showed that revenue rose by nine per cent while operating profit declined by 15 per cent from N53 billion in 2022 to N45 billion in 2023 due to higher input costs and one-off reorganization costs despite the strong and aggressive cost savings and other efficiency measures.
Shareholders who spoke at the meeting described the recapitalisation exercise as a step in the right direction noting that it would have a considerable impact on the company’s business growth and performance.
While applauding the company on its business recovery plan, National Coordinator, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, said there was no better time to make such an audacious move as this would help to significantly improve the company’s performance.
Speaking at the Nigeria-Netherlands Business and Investment Forum in The Hague, Tinubu had emphasised that bilateral partnerships must be mutually beneficial and transformative and translate into real gains for ordinary citizens.
According to him, Nigeria and Netherlands must explore more creative channels of collaboration, through partnerships, joint ventures, or strategic alliances to build bridges that connect markets and facilitate the flow of goods, services, ideas and peoples.
He outlined that his administration is enhancing the business environment in Nigeria to make it very friendly through various reforms, citing the string of recent financial and macroeconomic reforms, including the cleaning up of foreign exchange market to make it more transparent for seamless business transactions, removal of the fuel subsidy, and the readiness of the Central Bank of Nigeria to provide the necessary window to allow foreign companies repatriate their profits, among others.
Tinubu said the improved business milieu in Nigeria is making the country an investor’s paradise, urging businessmen and women to take advantage of these opportunities for mutually rewarding economic partnerships between Nigeria and the Netherlands
NB recently struck deals to acquire two Nigerian subsidiaries of Heineken in transactions valued at about N7.01 billion.
NB sought to acquire 80 per cent shareholding in Distell Wines and Spirits Nigeria (DWSN) Limited and 100 per cent import business from Heineken Beverages (Holding) Limited.
Following the conclusion of the transaction, DWSN would become a subsidiary of NB while the operations of NB will be expanded to include importation, marketing and distribution of wines, spirits and cider products.
